The US has stated that India remains a “difficult place” to do business, asking it to build an attractive and stable investment climate by lowering investment barriers and lowering bureaucratic impediments. In a report titled “2021 Investment Climate Statements: India,” released on Wednesday, the State Department stated that India “remains a challenging place to do business,” referring to the removal of the state of Jammu and Kashmir’s (J&K) special constitutional status and the passage of the Citizenship Amendment Act (CAA).
“New protectionist measures, such as higher tariffs, procurement rules that limit competitive choices, sanitary and phytosanitary measures that aren’t based on science, and Indian-specific standards that aren’t aligned with international standards, effectively cut producers off from global supply chains and limited bilateral trade expansion,” according to the report.
The State Department stated in its report that the administration of the National Democratic Alliance (NDA) made two “controversial” choices in the first 100 days of its second term. It cited the abolition of J&K’s special constitutional status as well as the passage of the CAA. The CAA was an “internal affair” for India, according to the country, and “no foreign entity has any locus standi on issues pertaining to India’s sovereignty.”
India has made it clear to the world community that the repeal of Article 370 is a domestic concern for the country. According to the State Department report, protests began after the CAA was passed, but ceased with the outbreak of COVID-19 in March 2020 and the implementation of a stringent national lockdown.
In 2020, the management of COVID-19, which included a reduction in economic activity, became the primary concern, and by December 2020, economic activity had begun to show signs of positive growth. According to the State Department, India launched massive social welfare and economic stimulus programs, as well as increased investment in infrastructure and public health, in response to the economic problems posed by the COVID-19 outbreak and the following national lockdown.
“Production-linked incentives were also implemented by the government to encourage manufacturing in medicines, autos, textiles, electronics, and other industries. These policies aided India’s recovery from an 8% drop in GDP between April 2020 and March 2021, with positive growth resuming by January 2021 “It was stated.
The report stated that, following COVID-19, India adopted ambitious structural economic reforms, including new labor rules and significant agricultural sector reforms, which should assist attract private and foreign direct investment.
Finance Minister Nirmala Sitharaman revealed plans to raise USD 2.4 billion through an aggressive privatization initiative in February 2021, reducing the government’s role in the economy considerably.
According to the article, Parliament further liberalized India’s insurance business in March 2021, boosting FDI restrictions to 74% from 49%, but still requiring a majority of the Board of Directors and managerial employees to be Indian nationals.
(News input: The Economic Times)